The ECB Consumer Expectations Survey for October showed a small uptick in near-term inflation expectations, with the median 12-month outlook rising to 2.8% from 2.7% in September.

Longer-term expectations remained stable, with the three-year horizon unchanged at 2.5% and the five-year measure anchored at 2.2%. Inflation uncertainty was likewise steady, indicating consumers do not see a significant shift in the underlying trend.

On the economic front, consumers grew slightly more optimistic about growth. Expectations for GDP over the next 12 months improved to -1.1%, up from -1.2% previously. However, labor-market expectations worsened. Consumers now expect the unemployment rate to reach 11.0% in 12 months, up from 10.7% in September.

Full ECB Consumer Expectations Survey here.

ECB meeting accounts from October showed unanimous agreement to keep all three key interest rates unchanged, with policymakers noting that both the inflation outlook and incoming activity data had broadly aligned with September’s baseline. The economy was still expanding despite global headwinds, giving the Governing Council confidence that the current stance remained appropriate.

Members highlighted that December will bring critical new information, including a fresh set of staff projections extending to 2028 for the first time. These forecasts will offer a “clearer picture of the outlook at that horizon”.

However, the accounts revealed differing views on whether the rate-cutting cycle has fully run its course. Some members argued that the favorable outlook meant that “should not be fine-tuned” in response to “moderate and temporary fluctuations” of inflation.

Others cautioned that the Governing Council must remain “entirely open-minded,” noting that another rate cut could be justified if downside risks intensified or if projected inflation undershoots persisted. That viewpoint stressed that the bar for action should be “no higher than normal”.

Full ECB meeting accounts here.

ECB chief economist Philip Lane said overnight that while headline inflation has hovered near target for most of the year, the picture is still flattered by energy deflation. Non-energy inflation remains “well above 2%,” and Lane stressed that a further slowdown is required to ensure inflation is sustainably anchored at target. Nevertheless, he added “We’re confident that’s going to happen because everything we look at tells us wage dynamics are set to decelerate further.”

Lane also addressed concerns around U.S. tariffs and Europe’s export exposure. He argued the hit may be smaller than feared, as the AI-driven expansion and high U.S. government spending are supporting American demand. Under these conditions, firms still have room to pass through tariff-related costs to U.S. importers and consumers. While the U.S. is an important partner, Lane underlined that it is “not the predominant driver of the European economy.”

However, he warned that tariffs are reshaping global trade flows in meaningful ways, particularly in Asia. China is exporting more to Southeast Asia, Southeast Asia is exporting more to the U.S., and China is simultaneously increasing its footprint in Europe and other markets. Lane called this a “very big reconfiguration” of the global system, one that intensifies competitive pressure on European firms even at home.